Political parties are queueing up in their offers to cut taxes, in their bids to win votes in the upcoming election.
From “making work pay” to striving for “a fair tax system“, it all sounds great.
Looking a little closer, the four main political parties are suggesting the following key changes to the tax system.
Labour proposes to remove the universal social charge (USC) on the first €72,000 of individual income, with this advantage removed progressively for those earning over €100,000, and removed entirely for those earning €120,000.
They also propose reducing PRSI for those earning below €704 per week.
Fine Gael proposes to “abolish the USC” but similar to Labour, they suggest that removal of the USC will be tapered for higher earners.
From a farming perspective, it’s interesting to read that Fine Gael will continue with its efforts to equalise the tax system for self-employed persons, to be completed by 2018.
(Budget 2016 introduced a self-employed tax credit worth €550 per annum, in an effort to bridge the gap between self-employed and the majority of PAYE workers who are currently entitled to a PAYE credit of €1,650 per annum).
Sinn Féin proposes to scrap the local property tax in respect of family homes and water charges; remove those on the minimum wage from the USC net; introduce a third rate of income tax on individual earnings over €100,000; introduce a tax on individual net wealth in excess of €1m (excluding working farmland and business assets; and to increase the tax take as a percentage GDP in a fair and progressive manner.
Sinn Féin would overhaul the tax system to eliminate tax avoidance, unfair reliefs and loopholes.
Fianna Fáil suggests they would implement a reduction in the rates of USC with the first €12,012 to be exempt (currently taxed at 1%), and the next €6,656 taxed at 1.5% (currently 3%).
A special rate of capital gains tax of 10% would apply on the first €15m of gains, with a reduction in the standard rate of capital gains tax to 25% as resources allow.
Renua offers perhaps the most radical tax proposals of any of the parties, with a headline-grabbing “flat tax” rate system whereby individuals would be liable to tax at 23%, regardless of income.
It argues such a move eliminates the disincentives to work which are prevalent in the current system.
Other radical measures proposed by this political newcomer include an abolition of motor tax, albeit with a levy to apply on fuel; and the introduction of a zoned land tax in a bid to stimulate development.
In the likely event of a coalition government being formed after the election, it’s easy for parties to dismiss their tax promises as a result of compromises made in arriving at a programme of government.
It’s often the case that governments take their time in delivering on promises, skewing any expensive tax breaks towards the end of their term in government.
This has the double benefit of maintaining tax revenues for as long as possible, while honouring the pre-election bonanza offer which wins them votes in the election.
As such, the promises for changing the tax system are little more than vague intentions, unless political parties suggest they are redline issues in their manifestos, and spell out timeframe commitments for each tax policy change.
Over the coming weeks, it would be of huge benefit to us farmer voters if we knew exactly where we will stand for the coming five years.
To that end, each party should publish its multi-annual budgets for the coming five years, and map out how its taxation policies would be affected by coalitions.
I guess that’s just wishful thinking.
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